India's Modi vows to fix broken government, but no big bang reforms

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Indian Prime Minister Narendra Modi addresses the nation from the historic Red Fort during Independence Day celebrations in Delhi August 15, 2014.
REUTERS/Ahmad Masood

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Indian security personnel stand guard at the historic Red Fort as Indian Prime Minister Narendra Modi (unseen) addresses the nation during Independence Day celebrations in Delhi August 15, 2014.
REUTERS/Ahmad Masood

NEW DELHI Indian Prime Minister Narendra Modi voiced dismay on Friday at the government in-fighting he found on assuming office in May and vowed to fire up the bureaucracy to deliver results in a country desperately in need of growth and development.

Delivering his first Independence Day speech, Modi emphasized the need for better governance but announced none of the sweeping market reforms that many who handed him India's biggest election mandate in three decades have been awaiting.

Critics say that Modi, who spoke for more than an hour from the ramparts of the 17th-century Red Fort, from where Mughal kings ruled Delhi for two centuries, scores high on oratory but has delivered on few of his election campaign promises.

He did, however, unveil an initiative on Friday to improve access to financial services for the two-fifths of Indians who lack a bank account and are often at the mercy of moneylenders who charge extortionate interest.

He also announced that he would replace the central Planning Commission that for decades guided the country's socialist-style economy with a more modern institution.

The 63-year-old prime minister, a newcomer to central government after running the industrialized western state of Gujarat for more than 13 years, bemoaned New Delhi's bureaucratic disarray.

"I saw that even in one government there were dozens of governments. It was as if each had their own fiefdoms," he said, touching on a key concern for many Indians, who have come to revile the layers of bureaucracy and rampant corruption.

"The government is not an assembled entity but an organic entity. I have tried to break down these walls," Modi said.

The center-left government led by the Congress party that was ousted in the election was seen as ineffectual and unable to carry out reforms as departments from finance to environment worked at cross-purposes.

Modi promised in his election campaign to revive economic growth that has fallen below 5 percent, choking off job opportunities for the one million people who enter the workforce every month, and dangled the prospect of new roads, factories, power lines, high-speed trains and even 100 new cities.

So far, there has been little movement on any of these tasks, which will require an overhaul of land acquisition laws, faster environmental clearances and an end to red tape.

Many of his supporters have been disappointed that he has not cut food aid and other costly welfare schemes to channel money into more effective poverty reduction steps. However, economists said it was too early to expect dramatic initiatives.

"Let's get our expectations to real, acceptable levels," said Shubhada Rao, chief economist at YES Bank. "For the first three years, it is going to be a repair-and-mend phase ... only then the economy will be ready to take off. Until you repair, these big bang announcements would go to waste."

MADE IN INDIA

In his speech, Modi spoke of the need to strengthen the manufacturing sector and appealed repeatedly to investors: "Come, make in India".

He also spoke about violence against women, saying his head hung in shame to see incidents of rape and sexual assault continuing unabated since the world was stunned by the gang rape and murder of a young woman in New Delhi in 2012.

He said that while the law will take its course, Indian society must itself be raising sons in the best possible manner.

"After all, a person who is raping is somebody's son. As parents have we asked our sons where he is going? We need to take responsibility to bring our sons who have deviated from the right path, to bring them back."

He urged an end to caste and communal violence, drawing a critical response from his political opponents who have accused his Hindu nationalist Bharatiya Janata Party of inciting social tensions for electoral gain.

Modi has been dogged for years by allegations that he did too little to prevent riots in Gujarat in 2002 in which more than 1,000 people, most of them Muslims, were killed. He denies wrongdoing and was exonerated by an investigation ordered by the Supreme Court.

"The words are fine, but what about the track record?" Rajeev Gowda, a senior Congress party lawmaker, told news channel NDTV.

(Additional reporting by Manoj Kumar and Rupam Jain Nair in NEW DELHI and by Neha Dasgupta in MUMBAI; Editing by Douglas Busvine and Robert Birsel)

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